“This standby letter of credit may be assigned to [Affiliate]"

The clause is meaningless and may invite severe disappointment to an assignee who thinks that it is a transferee (it is not under UCP600 or most local laws) or that it can enforce an assignment of proceeds against the issuer or a nominated bank. While a beneficiary can “assign” the right to proceeds, the question is whether such an assignment is enforceable even if there is a complying drawing and no prior interest in the proceeds. It would not be under US law and should not be under other law because the acknowledgement of the issuer or a nominated bank is necessary.

Some courts may confuse the law of general obligations with assignments of proceeds but an assignee should not count on that result and, more importantly, it is the wrong result.

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